A “person having control” of premises for the purposes of section 263 of the Housing Act 2004 must be determined on a real and not a hypothetical assessment of who, at the material time, was in receipt of the rack-rent or who could grant a lease at a rack-rent.
In Cottam and others v Lowe Management Ltd [2023] UKUT 306 (LC), the appellants were guardians of a former residential home (the Building). At all material times the Building was owned by NHS South East London Clinical Commissioning Group (CCG). The CCG was a health service body within the meaning of section 9 of the National Health Service Act 2006.
Pending sale of the Building, CCG appointed NHS Greenwich Charitable Trust (CT) as its agent to manage the sale. CT was not a health service body. CT, as agent for CCG, entered into an agreement with Lowe Guardians Ltd (Lowe) for the provision of guardianship services. Under the terms of the agreement, Lowe was permitted to appoint, as its agent, the respondent, who granted licenses to guardians to share occupation of the Building.
The appellants applied to the First-tier Tribunal for a rent repayment order against the respondent. The appellants argued that the Building was an HMO and that the respondent had committed an offence under section 72(1) of the Housing Act 2004, as it was in control of an unlicensed HMO.
The respondent defended the application on the basis that CCG was the “person in control” of the Building under section 263 of the 2004 Act. However, the Building was not an HMO because it fell within the exemptions under paragraphs 1 and 2(1) of schedule 14 to the 2004 Act; namely – premises managed or controlled by a health service body. The FTT agreed.
On appeal, the appellants argued that more than one person could be a “person in control” of premises under schedule 14 to the 2004 Act. As the respondent was not a health service body, it could not benefit from the exemption under schedule 14. The Upper Tribunal (Lands Chamber) rejected this ground. It found the appellants’ construction of schedule 14 too strained and deviated from the “plain words” of the statute.
The UT, however, found that the FTT had misconstrued the definition of “person having control” under section 263(1) of the 2004 Act. The definition did not import a hypothetical proposition that extended to an owner who could let premises at a rack-rent, but did not. Relying on the authorities, the UT underscored two points. First, if premises were let at a rack-rent, the “person in control” was the person who received the same. Second, in determining who was the person “who would so receive it if the premises were let at a rack-rent”, such a determination had to be grounded in reality – who could grant a new lease at a rack-rent. In the present case, CCG could not do so because it had already granted a lease of the property to Lowe for less than rack-rent.
Elizabeth Dwomoh is a barrister at Lamb Chambers
